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Kennel Metal Works received an offer from a big-box retail company to purchase 3,200 metal outdoor tables for $220 each. Kennel Metal Works accountants determine
Kennel Metal Works received an offer from a big-box retail company to purchase 3,200 metal outdoor tables for $220 each. Kennel Metal Works accountants determine that the following costs apply to the tables:
Direct material | $120 | |||
Direct labor | 40 | |||
Manufacturing overhead | 59 | |||
Total | $219 |
Of the $59 of overhead, $15 is variable and $44 relates to fixed costs. The $44 of fixed overhead is allocated as $1.10 per direct labor dollar. What will be the real effect on profit if the order is accepted? The profit will increase or decrease? by $__________
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